Strategic alignment, the solution to ensure that operations finally follow corporate strategy

Your company has drawn up an ironclad strategy and is ready to conquer the world! Oh wait... how do you ensure that the operational side follows and executes it perfectly?

That's where the notion of strategic alignment comes in, and particularly strategic IS alignment.

All very well, but what exactly does it involve? How does this process ensure the successful deployment of the organisation's vision?

To help you understand the concept of strategic alignment, we take a look at its definition and the different models that exist for putting it into practice. As an added bonus, here are a few tips and examples of tools to help you along the way.

See all software Project Portfolio Management (PPM)

What exactly is meant by strategic alignment?

Strategic alignment: a generic definition

The term strategic alignment refers to the implementation of processes within a company to align its ambitions with its operational activities. The result: employees who carry out the right actions at the right time on a daily basis, to achieve the major objectives defined by management.

Strategic alignment can involve all the layers and components of the organisation, and ensure perfect coordination between the overall strategy and :

• the organisational structure: the executive and management are organised in such a way as to support the company's vision and sustain communication at every level;
• the company's various departments: HR, sales, production, logistics, etc.

... and of course the IT departments.

Strategic alignment of information systems

This concept seems inseparable from IT services.

In fact, the expression mainly refers to the strategic alignment of information systems, and therefore :

• their own strategy
• their organisation
• associated infrastructures.

💡 To wit: this concept was developed by John C. Henderson and N. Venkat Venkatraman in the book Strategic alignment or the changing dimension of information systems in organisations.

Why such a focus on IS?

Because management is becoming increasingly aware of the contribution made by the IT department to value creation. They are no longer just about production! And for good reason: information systems are fertile ground for innovation and standing out from the competition. It is therefore in our interest to connect IT strategy with overall strategy and business lines.

☝️ This principle is also referred to as IT governance.

Why strategic alignment?

In an increasingly competitive environment, every company needs to define a vision, a course to follow to ensure its survival and growth.

But many experts agree that most strategic failures are due to poor execution rather than the strategy itself. Hence the importance of developing a real alignment process, to ensure 100% achievement of overall objectives.

When it comes to information systems, the benefits of a strategic alignment approach are more than obvious. In particular, it makes it possible to :

• take into account the value of information systems in serving the organisation's growth ambitions, information systems which sometimes drive the overall strategy in a spirit of innovation ;
• turn the IT department into a cross-functional service, dedicated to all the business lines in order to improve the operations of each one;
• optimise (sometimes substantial!) IT-related expenditure, by concentrating efforts on projects that deliver value.

The 4 models of strategic alignment

The principle of strategic alignment according to Henderson and Venkatraman

Theory is all very well... but how do you go about it?

Henderson and Venkatraman, who theorised the concept of strategic alignment, propose 4 models.

But to understand this, we need to define the concept of domain, since it characterises the nature of the relationship between management and the IT Department, to promote alignment.

There are 3 types of domain:

• the anchor domain: this is the domain that drives and steers change;
• the pivotal domain: this is used to implement the initiated change;
• the impact domain: this is where the change mainly takes place.

There are then 4 main components. These must be aligned to ensure perfect coordination:

• The company's strategy, in other words its market positioning and business network.
  
  
• Organisational infrastructure and processes, or how the company organises itself on a day-to-day basis:
  • hierarchical structure
  • communication,
  • departmental workflows, etc.
    
    
• IS strategy: here again we are talking about strategy, but in relation to information systems:
  • technologies
  • skills
  • governance, etc.
    
    
• IS infrastructure and processes: like general processes, these provide a framework for operations... but on the IS side. This component concerns :
  • the applications used
  • the technologies used
  • the way in which development projects (what methodologies?) and day-to-day work are organised, etc.

Model 1: Strategy execution

• Anchor domain: the company's strategy,
• Pivotal area : infrastructure and organisational processes,
• Impact domain: IS infrastructure and processes.

The strategy is established by senior management and the business units.

The IT Department then simply has to apply it, based on the general processes that have already been put in place.

Model 2: developing technological potential

• Anchor area: corporate strategy,
• Pivotal area : IS strategy,
• Area of impact: IS infrastructure and processes.

Here too, the strategy is defined by management, but it will also lead to a redefinition of the IS strategy (technological innovation to be deployed).

As a result, this model leads to changes in IS infrastructure and processes.

Model 3: developing a competitive advantage based on technology

• Anchor domain: IS strategy,
• Pivotal area: corporate strategy,
• Area of impact: infrastructure and organisational processes.

The strategy adopted by IS (particularly in terms of innovation) influences the company's positioning. The products and services offered are created in such a way as to offer competitive advantages.

The organisation's infrastructure and general processes are then aligned with the IT department's objectives.

☝️ This model is mainly found in technology-driven organisations, such as those operating in the digital or telecommunications sectors.

Model 4: Improving service quality

• Anchor domain : IS strategy,
• Pivotal area: IS infrastructure and processes,
• Impact area: infrastructure and organisational processes.

The IT Department's strategy is supported by an infrastructure and processes developed to improve service quality.

This scheme then impacts the company's infrastructure and processes, which must be optimised in order to improve overall performance.

💡 Note: it is possible to juggle between the different models depending on the subject and your objectives.

Example of strategic IS alignment and the approach to adopt

Start with what already exists

Starting with what already exists means taking account of the company's specific characteristics:

• its DNA
• its general organisation
• its internal and external environment, etc.

☝️ Encouraging alignment also means considering the personalities present in the structure. For example, this desire for cohesion can be disrupted if the decision-makers are not IT-savvy and do not understand the constraints faced by IT departments. The same applies in the opposite direction, where IT Departments are not always fully aware of the business issues at stake.

Consequently, a strategic alignment approach often involves change management.

Identifying obligations to redefine strategy

By obligations, we mean the requirements that stem from the company's strategy and lead to a rethink of IT strategy. In other words, how can information systems help the organisation achieve its objectives?

For example, if management wants to develop an innovative product to seize a new market opportunity, the IT Department will need to analyse what already exists:

• both its internal infrastructure to identify areas for improvement ;
• external factors to see what new opportunities (particularly in terms of technology) are available.

The result will be a redefined IS strategy.

Planning and steering the strategy

Aware of the summit to be crossed, and therefore of the changes to be introduced, the IT Department is in a position to plan the projects to be carried out, obviously prioritising those most useful to the objective of strategic alignment.

Each project is then implemented by means of a management system that ensures perfect coordination with the objectives throughout the life cycle, even if this means making adjustments where necessary.

Promoting communication and visibility

Strategic alignment is still very much a matter of communication, the common thread running through the process. Otherwise, how can you ensure that the issues facing management, the IT Department and the business are the same?

Dialogue and listening are therefore essential, right from the start of the strategic alignment process. For example, the IT Department must put in place systems to receive feedback from business users and, of course, from Management.

☝️ This requirement means putting in place an optimal communication structure to :

• circulate information as effectively as possible
• facilitate the sharing of ideas
• encourage teams to get together.

Using appropriate software

Improving strategic alignment requires the use of software capable of supporting communication and facilitating operational management.

PPM, or project portfolio management software, is a great ally in this respect.

Here are a few examples:

• 🛠️ Planisware Orchestra: with Planisware Orchestra, you prioritise projects and develop those that are most in line with the overall strategy. These projects (IT or other) can then be easily planned and managed throughout their lifecycle. The software also facilitates communication and provides a consolidated view of all operations, so that teams can be better coordinated. Finally, you'll benefit from optimum support in deploying and using the software.
  
  
• 🛠️ Project Monitor: Project Monitor is PPM software that helps you align your IS with your company's strategy. Within the tool, you can break down your IT master plan into projects and get an exhaustive overview of your IT portfolio (planning, budget, resources). Project Monitor offers customisable multi-project dashboards and information on projects, their status and project monitoring indicators. You can focus on projects that require decisions to be made or that are drifting off course. You'll have an overview that makes it easy to make the right decisions and stay within budget.

See all software Project Portfolio Management (PPM)

Strategic alignment in a nutshell

Strategic alignment ensures that all the company's activities are carried out in line with its overall vision.

Although it potentially concerns all departments, the expression is still used mainly in the context of management/IS alignment.

The advantage? Achieving the major strategic objectives defined by senior management.

To achieve this, organisations can draw on models, good practices (communicate!) and appropriate tools such as PPM.